The Central Consumer Protection Authority (CCPA) was established in July 2020 under The Consumer Protection Act, 2019, to protect any unfair trade practices and consumers' interests.
On 4th July, CCPA issued a guideline, ordering that “no hotel or restaurant shall add service charges automatically or by default in the bill”. A meeting was called by the Government on 2ndJune with the National Restaurant Association of India (NRAI), mentioning several complaints received from customers, being forced to pay service charges, and getting harassed on refusing to pay them.
What do the guidelines say?
CCPA issued 5 major guidelines:
1.No hotel or restaurant shall add service charges automatically or by default to the bill.
2.Services charges shall not be collected from customers by any other name.
3.No hotel or restaurant shall force any consumer to pay service charges and will inform the consumers that such service charges are not compulsory but optional, at the discretion of the consumers.
4.No restriction on entry or provision of services based on the collection of service charges shall be imposed on consumers.
5.Service charges shall not be collected by adding them along with the food bill and levying GST on the total amount.
Consumer rights in violation of these guidelines
In case of violation, the consumer has four options at different levels to lodge the complaint.
Firstly, the consumer can request the restaurant or hotel to remove such charges.
Secondly, on the refusal of removing such charges, the consumer can complain to the National Consumer Helpline (NCH), which works as an alternative dispute redressal mechanism at the pre-ligation level. For making the complaint, the consumer can either make a phone call on 1915 or the NCH mobile app.
Thirdly the consumer can also file a complaint to the consumer commission on the ‘edaakhil portal’ at http://www.edaakhil.nic.in.
And lastly, the consumer can also submit a complaint to the District Collector of the concerned district for investigation. A direct complaint to CCPA can also be made by sending an e-mail to email@example.com.
Law under which these guidelines are issued?
CCPA guidelines are issued under section 18(2) of The Consumer Protection Act, 2019. The guidelines are also in addition to the Centre’s guidelines of 2017 which prohibits service charges on consumers and termed any such charges those demanded without the knowledge or consent of the consumers as ‘unfair trade practice’.
Across the country, a majority of the organized restaurants have been charging a 10% service charge on food and beverages served on their premises. Last month, the Union Commerce Minister said that there is no constraint for increasing the prices but restaurants and hotels cannot levy service charges without the customer’s explicit consent.